Charity audit or independent examination

Hillier Hopkins LLP

Chartered Accountants & Tax Advisers

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Charities are quite rightly expected to be held to account for the donations and income they receive and how it is spent. The level of scrutiny required, however, will depend on income levels, with smaller charities able to take advantage of light-touch independent examinations.

The audit threshold for charities in England and Wales currently stands at an annual income of £1m, or if they hold assets valued above £3.26 million and with an income exceeding £250,000.

Small charities, which do not require an audit, but with an annual income of more than £25,000 a year, can opt for an independent examination. This need not be done by a qualified accountant, but by an independent person who is reasonably believed by the charity’s trustees to have the ability and experience to conduct a competent examination of the accounts. For most charities, this will, however, be a qualified accountant.

When a charity’s income exceeds £250,000 but is still below the audit thresholds, an independent examination must be carried out by a fellow of the Association of Charity Independent Examiners or a member of the Institute of Chartered Accountants of England and Wales (ICAEW) or a member of the Association of Chartered Certified Accountants.

The differences between an audit and an examination

An independent examination will provide a charity with limited assurance that nothing in the finances of the charity has been brought to the inspector’s attention that could leave it in breach of its obligations to the Charities Act 2011. Charities need, as a result, to maintain basic accounting records with trustees able to provide explanations of any unusual disclosures.

An audit will require the auditor to obtain evidence on amounts and disclosures in financial statements before they can give reasonable assurance that financial statements are true and fair and free from misstatement. Charities must maintain comprehensive accounting records with an auditor able to challenge and test the financial systems and controls a charity has in place.

A full audit offers more than just the assurance that a charity’s financial affairs are fair. They offer a charity and its trustees the opportunity to stress test the financial controls that are in place to minimise the risk of fraud or inadvertently breaking charity commission rules. Importantly, they can offer trustees the opportunity to sit above the day-to-day operation of the charity and focus on its performance and aspirations for the next financial year.

Will audit thresholds change?

Audit thresholds have remained unchanged since 2015 and earlier this year the ICAEW wrote to the Charities Commission suggesting thresholds should be increased, arguing that recent inflationary pressures have dragged more charities into the audit net. It also pointed to the increased demand on the audit profession where standards have become more exacting with resource and cost pressures.

The general election and potential change of government will undoubtedly delay any plans for a review of audit thresholds for quite some time, meaning charities will continue to operate under the current thresholds.

For advice and guidance on charity independent examinations and audits, contact our expert below.



Do you need extra information?

Adam Corless - Senior Accounts Manager at Hillier Hopkins

Adam joined Hillier Hopkins in July 2021 as an Accounts Manager and was promoted to Senior Accounts Manager in October 2022.

Contact Adam at or on +44 (0)1908 713 861

Milton Keynes

Gary Wong - Principal at Hillier Hopkins

Gary has over 20 years of audit experience and brings a wealth of experience from his time at Grant Thornton, Deloitte and RSM, working with various industry sectors from owner managed businesses through to large international groups and AIM listed businesses.

Contact Gary at or on +44 (0)1923 634453


Deanne Shumate - Audit Manager at Hillier Hopkins

Deanne joined Hillier Hopkins in 2007 from her previous firm Baker Tilly. A qualified chartered accountant and charities audit specialist, Deanne works on a number of our most high profile charity clients.

Contact Deanne at or on +44 (0)1923 634456